Correlation Between Ulta Beauty and 25160PAE7

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Can any of the company-specific risk be diversified away by investing in both Ulta Beauty and 25160PAE7 at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Ulta Beauty and 25160PAE7 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ulta Beauty and DEUTSCHE BK AG, you can compare the effects of market volatilities on Ulta Beauty and 25160PAE7 and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Ulta Beauty with a short position of 25160PAE7. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ulta Beauty and 25160PAE7.

Diversification Opportunities for Ulta Beauty and 25160PAE7

-0.37
  Correlation Coefficient

Very good diversification

The 3 months correlation between Ulta and 25160PAE7 is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Ulta Beauty and DEUTSCHE BK AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DEUTSCHE BK AG and Ulta Beauty is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Ulta Beauty are associated (or correlated) with 25160PAE7. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DEUTSCHE BK AG has no effect on the direction of Ulta Beauty i.e., Ulta Beauty and 25160PAE7 go up and down completely randomly.

Pair Corralation between Ulta Beauty and 25160PAE7

Given the investment horizon of 90 days Ulta Beauty is expected to under-perform the 25160PAE7. In addition to that, Ulta Beauty is 2.53 times more volatile than DEUTSCHE BK AG. It trades about -0.15 of its total potential returns per unit of risk. DEUTSCHE BK AG is currently generating about -0.14 per unit of volatility. If you would invest  9,971  in DEUTSCHE BK AG on November 7, 2024 and sell it today you would lose (129.00) from holding DEUTSCHE BK AG or give up 1.29% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy70.0%
ValuesDaily Returns

Ulta Beauty  vs.  DEUTSCHE BK AG

 Performance 
       Timeline  
Ulta Beauty 

Risk-Adjusted Performance

3 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Ulta Beauty are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Ulta Beauty is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.
DEUTSCHE BK AG 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days DEUTSCHE BK AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 25160PAE7 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Ulta Beauty and 25160PAE7 Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Ulta Beauty and 25160PAE7

The main advantage of trading using opposite Ulta Beauty and 25160PAE7 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ulta Beauty position performs unexpectedly, 25160PAE7 can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in 25160PAE7 will offset losses from the drop in 25160PAE7's long position.
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The idea behind Ulta Beauty and DEUTSCHE BK AG pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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Check out your portfolio center.
Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.

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